The House Ways and Means Committee reversed itself yesterday and voted to kill a bill it approved last Thursday that would have rolled back most of the increase in Social Security taxes that Congress enacted last December for 1979 and 1980.
In a dramatic turnabout, the panel voted 21 to 16 not to send the measure to the House floor, and indicated that this vote would be final. Last week's vote approving the legislation was 19 to 11. Two Democrats and three Republicans switched their votes yesterday.
The action was a major - and possibly fatal - setback to efforts by some lawmakers to roll back the new payroll tax increases. Although the measure could be brought up as a floor amendment to some other bill, it would not have the backing of the key tax-writing panel. And the Senate Finance Committee opposes any such change.
Rep. Al Ullman (D-Ore.), chairman of the commitee, who supported the bill last Thursday but led the fight to kill it yesterday, promised that Social Security financing would be the panel's "first order of business" in January.
Yesterday's action removed one of the major stumbling blocks in the panel's consideration of President Carter's income tax-cut plan. The committee suspended work on the Carter package in mid-April to try to work out a compromise on the program.
Yesterday's vote otensibly was a rebuff to the House Democratic Caucus, which voted 150 to 57 last month to ask the committee to draft rollback legislation following voters protests over the payroll tax increases last January. Carter opposed any rollback move.
However, there were indications that the House Democratic leadership was told in advance about yesterday's turnabout, and privately endorsed the shift. Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) told reporters that Carter had warned he would veto the bill if passed.
The vote-switching yesterday reflected a variety of factors, from second thoughts about the use of income tax revenues to replace the lost payroll taxes to concern over Carter's decision last Friday to trim his $25 billion tax-cut plan.
Along with Ullman, those shifting to oppose the payroll tax rollback yesterday were Reps. Kenneth L. Holland (D-S.C.), Bill Frenzel (R-Minn.) and L. A. Bafalis (R-Fla.). Rep. John J. Duncan (R-Tenn.) switched from opposing the bill to supporting it.
Ullman, who traditionally has opposed any use of income tax revenues to bolster the Social Security fund, said yesterday he had endorsed the measure Thursday "because of my responsibility" to the Democratic Caucus, but had decided "that I cannot live with" that position.
Frenzel and Bafalls said they switched because they feared that Carter's decision last Friday to trim his income tax-cut plan did not leave "enough room" to reduce both Social Security taxes and income taxes.
Meanwhile, the administration hinted it plans to ask Congress to skew what is left of its income tax-cut proposal primarily toward lower-and lower-middle income taxpayers - meaning the decision to trim the package will come at the expense of those earning $20,000 and more.
Although detils have not yet been worked out, Treasury Secretary W. Michael Blumenthal said Carter's action last Friday does not "preclude our ability to provide relief for lower-and lower-middle-income groups." But he conspicuously sidestepped mention of higher-income taxpayers.
At a breakfst meeting with reporters, Blumenthal said that although Carter first sold his tax-cut plan as a move to offset the impact of inflation and Social Security taxes, the program "was never intended" to achieve that for all income groups.
However, Ways and Means Committee members repeatedly have indicated they believe the president's proposal should be revamped to aim the benefits more toward those in the $17,000 to $28,000 income brackets.
Yesterday's action in Ways and Means was not without its critics. Rep. Barber B. Conable Jr. (N.Y.), ranking Republican on the panel, warned that it was creating an image of "vacillating" and would "throw the whole issue into disarray again."
And Rep. Fortney H. (Pete) Stark (D-Calif.) raised the possibility that if the committee did not draft some sort of rollback legislation, the House Rules Committee or the Democratic Cancus might.
However, panel members continued to express doubts about using general income tax revenues to bolster the Social Security fund, as last Thursday's measure would have done.
While the panel could change its mind again, Ullman said yesterday the latest vote would shelve the whole payroll tax issue for this year uness a new groundswell suddenly developed. House leaders have felt the payroll-tax issue waning since its high point last month.